GDP Grows at Rate of 2% in Third Quarter of 2010; Experts Say the Modest Growth Not Enough

The U.S. Commerce Department's Bureau of Economic Analysis (BEA) today released an "advance" estimate of real gross domestic product (GDP) growth for the third quarter of 2010, and the results were not encouraging. The U.S. economy grew at a rate of 2% in the third quarter, similar to what had been expected, and only a small increase over growth in the second quarter (1.7%). According to a New York Times article on the report, an economy growing at 2% annually "cannot produce nearly the demand needed to bring down the nation’s painfully high 9.6 percent unemployment rate. And the trade gap remains wide, as imports outpaced exports."

Although there were small signs of recovery, "demand...appeared flaccid in the third quarter," as income growth slowed and prices excluding food and energy increased. There are hopes that the fourth quarter of 2010 will show some real signs of economic recovery, as the three quarters of mild economic growth give people and businesses more confidence in the market.

But the effects of the stimulus are going to become less and less significant in coming months and "states face a sea of red ink as they look at next year’s budgets." And just how much confidence will increase after mild growth has yet to be determined: there is nothing close to a guarantee, experts say, that consumer spending will increase significantly in the face of such modest economic growth.

The "numbers are unlikely to provide much of a morale boost for President Obama and Democrats," who find themselves "just days away from crucial midterm elections."
SSDAN Office

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